EDF’s Borrowing Exceeds $12 Billion This Week With 100-Year Bond

Jan. 17 (Bloomberg) -- Electricite de France SA has capped
a $12.4 billion global fundraising this week by selling the
first 100-year bonds in Europe in almost three years.

The world’s biggest operator of nuclear reactors priced
1.35 billion pounds ($2.2 billion) of notes to yield 6.125
percent after issuing $700 million of bonds with the same
maturity on Jan. 13. The Paris-based utility is the second
company to sell century bonds in Europe that aren’t hybrids,
following GDF Suez SA in March 2011, according to data compiled
by Bloomberg.

Pension funds and insurance companies like to buy long-dated securities to match their liabilities while utilities can
align the debt with their industrial assets. EDF is offering the
debt as the average yield on pound-denominated bonds with
maturities of more than 15 years fell to 4.59 percent, the
lowest since Nov. 7, according to Bank of America Merrill Lynch
index data.

“Times come round when 100-year bonds make sense because
that’s what investors want to buy,” said Bill Blain, a
strategist at Mint Partners Ltd. in London. “People are looking
for long-dated assets because the repayments that are made over
the life of the bond help match the buyer’s liabilities.”

As part of its fundraising this week, EDF issued $5.4
billion of hybrid notes in dollars, euros and pounds, one year
after selling $8.5 billion of the securities combining elements
of debt and equity, according to data compiled by Bloomberg. The
company’s 100-year notes in dollars have a coupon of six
percent, the data show.

Debt Maturities

EDF made the most of “very good market conditions in the
U.S. and Europe,” said a spokeswoman for EDF in Paris, who
asked not to be named citing company policy. The bond sales
helped EDF extend the maturity of its debt and diversify its
investor base, she said.

Today’s sterling-denominated bond extends the average
maturity of EDF’s debt by 3.4 years, the company later said in a
statement.

The cost of insuring corporate bonds against losses is
holding near the lowest in four years in Europe. The Markit
iTraxx Europe index of credit-default swaps on 125 companies
with investment-grade ratings dropped to a four-year low of 69
basis points this month and was at 71 basis points at 4:01 p.m.
in London.